McDonald's exec offices in the Loop?

McDonald's has been in talks to secure a large downtown office space but today put the deal on ice—at least for now.

McDonald's signed a letter of intent to move into more than 350,000 square feet at One Prudential Plaza, a step that typically signals a deal is headed to completion, according to people familiar with the deal.

But the Oak Brook-based fast-food giant took the unusual step of putting the deal on hold shortly thereafter, according to a source. It's unclear whether the deal could still be revived.

McDonald's denied it was seeking to relocate and said it is not searching for space downtown.

“At McDonald's, we are focused on the early stages of turning our business around and becoming a more modern and progressive burger company,” spokeswoman Becca Hary said in a statement. “Thus far, we are encouraged by the results we are seeing. While we have challenged our people to think differently and explore all options, we have no current plans to relocate.

“We are not seeking to relocate our headquarters. We're not seeking additional office space in Chicago.”

The amount of space McDonald's was negotiating to take can hold 1,000 or more employees, depending on how it is configured. The company had 2,100 employees in west suburban Oak Brook as of last month.

After Crain's first reported McDonald's suspended its deal downtown today, McDonald's CEO Steve Easterbrook sent an email to corporate employees reiterating that the company is not relocating to Chicago.

A COMPANY IN TRANSITION

McDonald's financial troubles continued in its most recent quarter, marking the seventh consecutive quarter of sales declines for the burger giant.

On July 23, McDonald's said quarterly profit sank 13 percent to $1.20 billion while revenue fell 10 percent to $6.50 billion. Executives lay a large portion of the blame on U.S. business, where sales in restaurants open at least 13 months dropped 2 percent, in part because promotions like its one-third-pound sirloin burgers didn't meet expectations.

The company also has been in cost-cutting mode, cutting at 263 workers in its Oak Brook offices since December, including 135 last month. The cuts were part of a corporate reorganization that aims to cut costs by $300 million by the end of 2017.

Easterbrook in May said the initiative "is about restructuring and delayering. We're putting the right people in the right places. . . .We'll be conducting an additional review of our corporate functions in the coming weeks and reducing (general and administrative expenses) as we look to align our support more closely with the new structure."

MIGRATING DOWNTOWN

McDonald's apparently aborted real estate deal comes on the heels of a number of big corporations moving their headquarters or shifting large numbers of workers to the city from the suburbs in recent years, including United Airlines, Kraft Heinz, Motorola Mobility, Gogo and Sara Lee spinoff Hillshire Brands.

McDonald's would have been a notable addition to the urbanization trend because the company is so synonymous with the suburbs.

McDonald's was founded in Des Plaines in 1955 and has been on its Oak Brook campus since 1971. That year, the company moved to the western suburbs from an office at 221 N. LaSalle St. in the Loop.

It is unclear whether the Loop space at 130 E. Randolph St. would have become McDonald's headquarters or which functions were ticketed for downtown. Earlier this year, McDonald's leased a 12,000-square-foot space in River North for digital strategy workers.

McDonald's is represented by International Director Meredith O'Connor and managing directors Matt Carolan and Scott Miller of Chicago-based Jones Lang LaSalle. Matt Pistorio and William Truszkowski, senior vice presidents at Chicago-based leasing brokerage Telos Group, represent Prudential Plaza's owners. The brokers involved in the deal either did not return calls or declined to comment.

PRU MAKEOVER

The 2.2 million-square-foot Prudential Plaza complex is owned by a venture of Nanuet, N.Y.-based Berkley Properties and New York-based 601W Cos. They have invested extensively in the property, including a new lobby and a 13,000-square-foot roof deck and 12,000-square-foot fitness center on the 11th floor.

Pru Plaza is next to the 83-story Aon Center, where newly merged Kraft Heinz will move its headquarters from north suburban Northfield. A venture of 601W has agreed to buy the Aon Center for $712 million, a deal expected to close in the fourth quarter.

In other recent deals yet to be announced by the companies, Schaumburg-based Motorola Solutions and Omaha, Neb.-based ConAgra Foods—which has a large office in Naperville—plan to relocate a large number of employees downtown.